What Are a Bookkeeper’s Responsibilities?

bookkeeper responsibilities

Bookkeepers are essential for any business. The core function of a bookkeeper is data collection and data input of a business’ accounting cycle. However, a bookkeeper’s responsibilities can vary significantly from business to business. So, if you’re considering hiring a bookkeeper for your small business, it’s important to understand a bookkeeper’s responsibilities to find suitable candidates as quickly as possible. 

Reconciling entries to balance subsidiary accounts

Account reconciliation after each financial month or quarter is crucial for companies and individuals. This allows them to check for fraudulent behavior and avoid accounting information problems by ensuring each transaction adds to the required final account balance.

The amount of each transaction needs to be compared to the amount shown as entering or exiting the relevant account throughout the documentation review process. For example, small business owners can sometimes dismiss small expenses or use their business cards to pay for their personal expenses. The resulting unusual bank statements can cause trouble with the IRS, so to avoid this, a bookkeeper will verify credit card activity with receipts and make adjustments if needed.

Maintaining a balanced general ledger

A general ledger is the cornerstone of a process used by bookkeepers to record and arrange accounting transactions necessary to generate income reports for the company. 

The transactions are subsequently closed or reported to the general ledger, and the bookkeeper prepares a trial balance, which serves as a summary of the balance of each ledger account. The trial balance is reviewed for faults and modified by posting additional required entries before being utilized to construct the income reports.

The bookkeeper collates and analyzes general ledger transaction information at several tiers to create financial statements, net income, balance sheets, cash flow, and other financial reports. This assists business owners, corporate management, auditors, shareholders, and other participants in continuously assessing the financial operations.

Preparing a trial balance for the accountant

A trial balance is a list of all the accounting journal balance sheets. It helps to verify that a debit registered in one accounting system is balanced with another account in the credit. A trial balance also serves as the foundation for creating the cash flow statement, the income statement, and the statement of cash flow.

Bookkeepers must first finish or “balance off” the ledger accounts to produce a trial balance by displaying each closing amount from the accounting records as a debit or credit balance. The sum of the ledger accounts should always match the sum of the credit accounts. 

Monitoring for variances from the projected budget

A budget variance is a recurring metric used among authorities, organizations, and individuals to assess the difference between budgeted and actual statistics for a particular accounting area. 

A favorable budget variance denotes positive variations or benefits, while an unfavorable budget variance denotes negative variance, indicating losses or shortages. A favorable variance occurs when revenue exceeds budgeted levels or expenses are lower than expected, while an unfavorable variance happens when the income falls far short of the estimated budget or expenses exceed expectations.

Budget variations can occur as a result of both controlled situations (such as a poorly planned budget and labor costs) and uncontrollable situations (such as a natural disaster.)

If there is a significant difference, bookkeepers will examine the financial records to find the cause. Then, they will decide whether to rectify the situation or not. However, if a significant disparity continues over a longer time, the business owner needs to review their planning approach.

Collecting and organizing financial data

Bookkeeping is the branch of accounting that handles the gathering and organizing of financial data. This implies that the bookkeepers’ responsibilities include collecting, arranging, and filing all financial data for your organization.

A bookkeeper is responsible for managing:

  • Invoices/receipts
  • Payroll records
  • Bank and credit cards statements 
  • Tax forms and other tax-related documents

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The bottom line

Understanding a bookkeeper’s responsibilities will assist you in finding a qualified bookkeeper for your business. However, if you’re new to running a business and short on resources, you can try handling these tasks by yourself. 

To achieve that, you can consult with a bookkeeper professional, take up some bookkeeping courses, and rely on accounting software. And Shoeboxed can help you with that!  

About Shoeboxed

Shoeboxed is a receipt management application that turns your receipts and business documents into a digital format in just one click by taking a picture straight from your smartphone or scanning a pdf. It automatically extracts, categorizes, and human-verifies important data from your receipts so that you can go over and check your records anytime with ease. Shoeboxed ensures you will always have your receipts securely stored and ready for tax purposes.

Access your Shoeboxed account from your web browser or smartphone app. Stay audit-ready with Shoeboxed for FREE now!